With new year, HEA starts generating own power

After nearly six years of study, planning, designing and construction, HEA is set to begin generating its own power on Jan. 1, 2014. The move to self-generation signals an end to a decades old contract under which HEA purchased wholesale power from Chugach Electric Association.

As of Jan. 1, HEA will no longer be paying for generation facilities and jobs that are located in Anchorage. Instead, we now have three HEA-owned generation plants on the Kenai Peninsula and the people operating those plants are Kenai Peninsula residents. In addition, many contractors that helped build the new plants also are based here on the Kenai Peninsula.

The decisions to build generation plants in Nikiski and Soldotna, as well as purchase the Bernice Lake Power Plant, were not made lightly. Six years ago, it was clear that new power plants were going to be needed in Southcentral Alaska. The dilemma facing HEA was to either continue being a wholesale power purchaser and pay for someone else’s new generation plants or build and operate our own facilities.

The studies and analyses showed that in either case, the cost to HEA and its members was about the same. Rather than pay the bill for a plant someone else owned, HEA’s board of directors decided to move forward with a plan to build, operate, and pay for our own generation plants. In short, it was determined that if we are going to have to pay for new facilities, it made more sense to own and employ local residents than to enter into another long-term lease on assets not located in our communities.

Today, we have a combined cycle plant in Nikiski that features a new steam turbine and generator that uses steam to produce approximately 18 megawatts of power without using any additional natural gas. With the addition of the steam turbine to the existing natural gas combustion turbine, the Nikiski plant has the capability of producing 80 megawatts of power.

We also are in the process of building a 48-megawatt plant in Soldotna that features a very efficient natural gas combustion turbine. And for meeting our members’ demand for electricity during peak periods, HEA receives a share of the Bradley Lake Hydroelectric Plant near Homer.

Lastly, for back-up and reserve requirements, HEA owns the Bernice Lake Power Plant in Nikiski.

The common theme for the new power plants here on the peninsula and around the rest of Southcentral Alaska is that they all use natural gas for fuel. Without another source of fuel, the cost of electricity will continue to be tied to the price of natural gas. Homer Electric has secured a contract for gas supply through March 2016 with an option to extend the contract two additional years. We are fortunate to have the contract in place; however, the rising price of gas paid by all Railbelt utilities is pushing electric rates upward. Unfortunately, the trend is not likely to reverse itself anytime soon and HEA’s increase in rates scheduled for Jan. 1 is tied directly to the cost of gas.

Knowing how dependent we are on natural gas, our goal is to make sure we operate as efficiently as possible and at the same time push forward on alternative energy projects. HEA continues to study the feasibility of a small hydro project at Grant Lake near Seward. We also have a partnership with Ocean Renewable Power Company (ORPC) and are working with them to install a tidal pilot project in Cook Inlet. HEA encourages members to look for ways to reduce their energy usage and have offered valuable information at recent Energy and Conservation Fairs in Kenai and Homer.

While we are about to embark on a new and exciting chapter in our cooperative’s history, it’s important to remember our main mission. HEA is a member-owned cooperative that is committed to providing safe, reliable, and fair and reasonably priced electricity to its members. That will never change.